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Can Cryptocurrency Payments Reduce Chargebacks in Ecommerce
In the world of eCommerce retailers, cryptocurrency is becoming increasingly important. Cryptocurrencies aren't new to e-commerce; but, now that more investors than ever have crypto to spend, they're becoming a bigger part of the eCommerce economy.
For retailers interested in accepting crypto-based payments, there are a number of possible advantages. Implementing blockchain technology, for example, can aid in the reduction of fraud. Credit card denials, chargebacks, and cart abandonment may all be reduced with cryptocurrency purchases.
With these advantages, crypto also helps reduce chargebacks and fraud in commerce. That is the focus of this article, so let’s dive into it by first understanding cryptocurrency briefly.
Cryptocurrency and Ecommerce
At some time, you may have contemplated taking Bitcoin as a form of payment for your e-commerce shop. With all of the talk about cryptocurrencies, blockchain, and NFTs, all e-commerce business owners should at the very least be aware of how cryptocurrency may be utilized for online transactions.
Despite recent volatility in bitcoin pricing, major e-commerce platforms such as BigCommerce, WooCommerce, and even Shopify now accept cryptocurrency payments through crypto wallets such as Coinbase, BitPay, GoCoin, and CoinPayments.
Cryptocurrency is a digital type of currency (i.e., lines of computer code) that allows users to spend money anonymously and is not issued by a bank or government. Bitcoin is the most popular crypto to date, and these virtual currencies may be purchased, traded, and kept on exchanges such as Coindesk, as well as used to buy online products anywhere they are accepted.
To make a purchase, you must first store Bitcoins in a digital wallet, which may be found on a hard drive using secure software or on internet exchanges (such as Coinbase), and then transfer Bitcoin from your virtual wallet to the vendors.
So how can crypto payments reduce chargebacks in Ecommerce? Let’s take a look.
Role of Crypto to reduce chargebacks in Ecommerce
Consumers are increasingly turning to internet shopping since it allows them to buy what they want whenever and wherever they want. E-commerce is also bringing in a lot of money for online retailers. However, the fast growth of e-commerce has made it simpler for online shoppers to perpetrate fraud. One of the most damaging types of fraud for online businesses is chargeback fraud.
Chargeback fraud occurs when a customer purchases goods or services online using his credit card or an online payment platform, then requests a chargeback with the product or service remaining.
When a consumer disputes a charge, the bank or online payment platform will provide a refund while the customer retains ownership of the item. Because consumers frequently make statements that appear convincing and honest, this form of fraud is also known as "friendly fraud."
Chargeback fraud is becoming a major issue for online merchants, expected to cost more than $25 billion per year by 2025 and rise at a pace of 41% each year.
One possible reason for the rise in chargeback fraud is because people may feel comfortable claiming they never obtained those items or services and demanding a refund, but they would not contemplate taking products or receiving service without paying in a physical store. Many consumers who request a refund for the first time are naive, but once they understand how simple it is, they are more likely to do it again.
Fraudsters frequently use the following justifications to file a chargeback:
- The cardholder has not approved the transaction
- The products are not delivered in a timely manner
- The client received things that did not match the description or that were damaged
- The item has been returned by the consumer, but no reimbursement has been issued
- Despite the fact that the client canceled the order, it was nonetheless shipped to them, and
- Customers have no recollection of making the transaction, implying that their credit cards have been hacked.
Regulations that protect online merchants and combat fraud have struggled to keep up with the rapid evolution of e-commerce. Hundreds of thousands of cross-border e-commerce firms throughout the world, in particular, require the cooperation of many nations' rules and regulations and thus are the most vulnerable to chargeback fraud.
Contrary to common assumption, the blockchain technology that underpins bitcoin was created with the goal of reducing fraud. Accepting bitcoin reduces the possibility for fraudulent chargebacks or refunds since money is transferred instantly, it cannot be retracted, and it cannot be falsified.
In conclusion, Chargebacks and fraudulent returns may be costly to an online business, therefore many retailers anticipate some fraudulent charges. The blockchain technology that underpins bitcoin should eliminate the possibility of fraud.
Royex Technologies has been at the forefront of Blockchain and Cryptocurrency development for many years now. We will help you seamlessly integrate blockchain and cryptocurrency technology in your mobile app development and eCommerce solutions in Qatar. We have developed our own crypto, ryxcoin, so we are well familiar with this emerging technology. If you are interested in any blockchain and cryptocurrency projects, contact us today. Feel free to call us at +971566027916 or mail us at firstname.lastname@example.org, and we can send you a proposal based on your idea.